Savannah Energy (SAVE ) said its Accugas subsidiary has entered into a new gas sales agreement with the Nigerian-based Central Horizon Gas Company (“CHGC”), a subsidiary of Axxela, a major gas distribution company situated in the South-South region of Nigeria.

The independent energy firm said CHGC operates a 17km gas pipeline infrastructure network with a throughput capacity of 50 million standard cubic feet of gas per day (“MMscfpd”)

CHGC provides natural gas to industrial and commercial customers in the Trans Amadi Industrial Area of Port Harcourt as well as the Greater Port Harcourt Area in Nigeria.  

CHGC is majority owned and controlled by the Nigerian-based gas distribution company Axxela, which delivers natural gas to over 185 industrial and commercial customers via its gas infrastructure network across cities in Southern Nigeria including Lagos and Port Harcourt.

Savannah, an African-focused British company, outlined that under the terms of the GSA, CHGC can nominate to be delivered up to a maximum daily quantity of 5 MMscfpd. The GSA is initially for a one-year period but is extendable by mutual agreement, Savannah explained.

As part of the agreement, Accugas is expected to deliver gas via its Ikot Abasi Gas Receiving Facility and then via third-party gas infrastructure to CHGC in the Port Harcourt area. 

First gas deliveries are expected to commence within the next 12 months and are dependent on CHGC completing certain works to connect to the third-party gas delivery infrastructure. Accugas is not expected to incur any additional capital expenditure in this regard, it noted.

Andrew Knott, CEO of Savannah Energy, said: “We are delighted to announce this new gas sales agreement with CHGC and the Axxela Group. This transaction once again demonstrates Accugas’ position as gas supplier of choice in South East Nigeria. We look forward to a successful future partnership with both CHGC and the wider Axxela Group.”

Axxela’s Chief Executive, Bolaji Osunsanya, said: “One of our core values is partnership and we believe in the power of collaboration as a way of unlocking unlimited possibilities. This new arrangement demonstrates our commitment to delivering value-adding energy solutions across Nigeria, and most importantly, it further underscores our overarching goal of spurring the socio-economic development of key hubs across Nigeria and the African region.”

In Nigeria, Savannah Energy has controlling interests in the cash flow generative Uquo and Stubb Creek oil and gas fields, and the Accugas midstream business in South East Nigeria, which provides gas enabling over 10% of Nigeria’s thermal power generation. 

In an update released last month, Savannah said it believes that its proven hydrocarbon asset operational management skills are directly transferable to the renewable energy space, which in Africa represents a potentially vast target market of over 310GW by 2030, it highlighted.

Last month, the independent energy firm told investors that it had exceeded its guidance set out at the start of 2021, with its Nigerian assets ‘continuing to perform well’ throughout FY21.

Savannah, an African-focused company, has published a strong set of initial results for 2021, reporting $230.5m in revenue for FY21, up 7% on FY20 on a like-for-like basis, ahead of its previously issued FY21 guidance which forecast total revenues to be ‘greater than $205.0m.’

Group cash balance was reported at $154.3m, up 46% versus FY20’s year-end cash balance of $106.0m, as well as net debt of US$370.0m, down 9% versus FY20’s figure of $408.7m.

Cash collections from its Nigerian assets rose 11% year-on-year to $208.2m from $187.4m.

As a result, the Company updated its guidance on the remaining items to report for FY21.

Savannah said it will continue to seek to execute its “Projects that Matter” strategy as it continues to review opportunities in the renewable energy space and asset acquisitions. 

Outlining the “Projects that Matter” strategy in a previous annual report for 2020, Knott states:

‘’Our purpose is clear: we are seeking to deliver energy projects in the emerging world which are making meaningful positive socio-economic contributions to our host countries.‘’

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